Stovold v Barlows (A Firm)

In professional negligence, a solicitor handling urgent documents must take reasonable steps to ensure that they are correctly addressed and sent by a suitable method. The solicitor is not an insurer against postal failure, but cannot assume, without enquiry, that the recipient subscribes to a document-exchange system or that a directory entry identifies the right recipient. Where the lost benefit depends on an independent third party’s hypothetical conduct, causation is established by proving a real or substantial chance, rather than proving the outcome on the balance of probabilities. The chance is then assessed as part of damages. An appellate court may revise a hypothetical-fact finding where it is shown to be wrong or irreconcilable with the evidence. Applying those principles, the lost chance was assessed at 50 per cent and the award reduced accordingly.

The claimant owned Birdfield and instructed the defendant solicitors to handle its proposed sale. After a purchaser made an urgent offer, the solicitors sent the title documents and draft contract through the DX system to an incorrect directory entry. The purchaser subsequently pursued another property.

Jowitt J held that the defendants were negligent and awarded £96,312.43 for the loss. He approached causation on an all-or-nothing balance-of-probabilities basis. The defendants appealed the findings on negligence and causation. The Court of Appeal had to determine whether the DX error was negligent and whether the claimant’s loss should instead be valued as a lost chance.

Appeal allowed in part. The award was reduced by 50 per cent. There was no order as to costs.

1. Negligence. Stuart-Smith LJ upheld the finding that the defendants were negligent. In an urgent and important transaction, a solicitor must take reasonable steps to ensure that documents are properly addressed and delivered by a suitable method. The solicitor is not an insurer against postal delay or loss, but cannot assume, without enquiry or checking, that the recipient subscribes to DX or that a directory entry identifies the correct recipient. Pill LJ agreed, emphasising that any practice by the receiving solicitor of stating that he was not on DX did not relieve the sending solicitor of that duty.
2. The trial judge’s supporting reasoning about the receiving solicitor’s usual practice was flawed because the evidence had been misunderstood. The conclusion on negligence nevertheless remained correct. The defendants’ separate decision not to telephone to enquire about receipt was not negligent, since the explanation given to the claimant was reasonable and accepted.
3. Causation. The trial judge had wrongly treated the issue as all-or-nothing: either the claimant proved that the purchaser would probably have bought Birdfield or recovered nothing. The Court applied the approach in Allied Maples Group Ltd v Simmons & Simmons (unreported Transcript 12 May 1995). Where loss depends on the hypothetical action of an independent third party, the claimant must prove a real or substantial chance, rather than a speculative chance. The chance is then assessed in quantifying damages.
4. Stuart-Smith LJ and Pill LJ concluded that the purchaser had decided to buy Stray House by Monday, so there was no substantial prospect of a Birdfield sale if the documents had arrived then. A substantial chance remained if the documents had been correctly posted on Thursday, because they would probably have arrived on Friday and the purchaser might not have viewed Stray House. Taking both contingencies into account, the chance was assessed at 50 per cent. Otton LJ agreed with both judgments.

1. Court of Appeal (Civil Division): Allowed the appeal in part and reduced the damages award by 50 per cent.
2. Queen’s Bench Division: Jowitt J held the defendant solicitors negligent and awarded £96,312.43 in damages and interest.